We're now running at half the pace of inventory that we had three or four months ago,'' Toll said.So I would guess, and that's all it is, it'll be another four or five months before you finally burn off inventory in most of the markets.
After predicting that the home market was nearing a bottom'' in December, Toll last month reversed course as deposits failed to live up to expectations. Today, he tempered his comments by saying the marketis still beset by speculation'' and that it may take longer in some areas to pare the number of unsold properties.
We believe that as soon as the market turns, and I'll speak about it, we think it'll turn with a vengeance,'' Toll said.The incentives are coming down.''
And what is the reason why we should listen to Bob Toll again? Why should Bloomedberg canvass his opinion again?
We should all listen very carefully to Rober(t) Toll. Particularly the sound of the cash register ringing (ala Cramer) as he continues to sell his TOL shares.
When I was in grad school I took some accounting & some marketing & 'operations'... but must've been asleep or on a business trip when they went over this 'suck' thing. Too bad.
Donald had better watch it, theyll write "sometimes expresses himself with very little tact" on his report card like one of my old bosses did to me.
Ya the 'other' Donald just tells you 'You're fired'... this guy will tell you 'You suck' first. Now that has all the makings of a highly rated cable reality show. Screw making houses, make TV instead.
Brian, I would think that ruling--and others like it, if MERS can prevail in other states--should speed up foreclosures (in mortgage states, at least. I'm not sure how much of an impact it has on DOT states). By how much, I don't know. It certainly make them cheaper, since it means that the servicer can handle the foreclosure in its own name, as assignee of the mortgage, without having to have everything be represented in law by the investor, who is the actual endorsee on the note. In other words, it should eliminate some really tedious paperwork and prevent foreclosures being stalled when some clever attorney argues that some motion got made by the servicer and should have been made by the investor. At least that's my understanding of it. I am, of course, not now nor have I ever been an attorney, jailhouse or otherwise, and therefore any reliance on any comment made on this blog as to matters of law or equity by any party of the second part is highly discouraged on the grounds that it's bird-witted.
At least in Florida (most of Florida anyway), Horton was late for the party. By 2003 most land owners "wouldn`t go" for option-contracts. So now Horton got stucked with a lot of land, for which they paid an arm and a leg. As I mentioned a few weeks ago, it looks like they are losing money on these new homes. So far this approach has been the lesser of two evils. But they better hurry, becouse a REO hurricane is coming. BTW, the same goes For K.B. Homes.
Was just in FL this week for Business, and DR Horton and KB Homes seem to have major developments still in the works down there. Just rows and rows of stucco boxes. They may be hurting. Met a fellow from a private equity type of company (not going to mention the name here) who is keeping their powder dry to buy the foreclosures and failed developments for pennies on the dollar. They're sitting on their hands for now. Just two data points, but two data points nonetheless.
Yal - yes, it is the credit crunch train, and yes, the credit crunch train now affects those hopeful option ARM refinancers with 700 plus FICOs in CA and FL, i.e. every third real estate agent and mortgage broker.
As I posted before, the big increase in refi apps is due to everyone trying to get in under the wire. This time its prime!!!!
And yes, DR Horton exec is right, it sucks. Welcome to walkaway city. Watch your step, pitfalls abound.
"I am, of course, not now nor have I ever been an attorney, jailhouse or otherwise,"
I was once a jailhouse attorney ... for about 6 weeks. My first client was serving a life sentence for murdering his wife for insurance money. My second client was a child molester who wanted me to stop a parental rights termination action. I just couldn't do it. So depressing. And all your clients are sleazeballs. Weird! By comparison, beating up the IRS seems so much more ... liberating.
Tanta, Can you comment on the following FDIC cease & desist order levied against FMT? What I would relly like to know is whether this same order would apply now across the board for all FDIC insured S&Ls.
In particular the following issues:
(i) qualifying borrowers for loans with low initial payments based on an
introductory or start rate that will expire after an initial period, without an adequate analysis of
the borrowers ability to repay the debt at the fully-indexed rate;
(ii) approving borrowers without considering appropriate documentation
and/or verification of their income;
(iii) containing product features likely to require frequent refinancing to
maintain an affordable monthly payment and/or to avoid foreclosure;
(iv) including substantial prepayment penalties and/or prepayment penalties
that extend beyond the initial interest rate adjustment period;
This seemed to disappear into the ether the last time I posted, so if it is a duplicate I apologize.
CR (and Tanta, dryfly, MOM, and anyone else of the fine commentators we have here that I've managed to miss), there seems to be a growing suspicion in the market that the Yen carry trade is coming to an end and that the foreign financing of US debt and consumption is about to be severely curtailed. (For example, from the Economist: Economist.com So what I was wondering is do you see this potential unwinding of the carry trade and possible drop in financing of the US twin deficits by foreigners as worsening two of CR's three factors (the sector-specific credit crunch that is happening and personal consumption (through limiting personal credit, MEW, and increasing the costs of goods)). And, if so, how much (e.g., a small amount or a possibly nasty multiplier effect)? I could see this having a nasty immediate effect on the burgeoning credit crunch in the housing market and/or the winnowing of the weaker lenders and financial companies.
Andrew - the way things are strung out now, if the carry trade completely dies the economy dies. Plain & simple. We are addicted to the liquidity.
I saw ron's post (above) about the yen at 115.83 (actually ended up at 115.90 according to Y-Fin).
I'd checked in earlier in the day & looked to see where it was at (have meetings with Japanese transplants in a few weeks and been watching the yen pretty close - self defense).
But if you look at the USD-JPY for the last year... its jumped around but is surprisingly close to where it was a year ago...
Now you can say that's a coincidence or you can say it is 'managed'... I don't know for sure. But if the carry trade was okay a year ago... and the rates here are the same or higher and the rates there are real close to the same (or a little higher)... and the exchange rates are pretty close to the same... Then why would the carry trade go away?
Maybe we see an adjustment - a little less aggressive, account for more volatility & arbitrage risk - but I think it is too early to suggest the carry is completely dead. JMHO.
But its been a week or more since I checked in w/ Setser or 'Cassandra in Tokyo'. Might be time to do both.
You all seem positive about 2007
sucking. Not every month, since January
and February were pretty good. Let's
see, what did I always hear about the
herd being wrong? I'm not saying 2007
WON'T suck, it's just that when I see
a stampede to one viewpoint, I get
sceptical.
Several commentators have noted that there was a partial unwinding of the most aggressive trades. However, with the Yen stabilizing around 115 and the BoJ promising not to raise rates for a while, they think that it will continue at a somewhat reduced level.
Two things to keep your eye on. 1. The Japanese GDP numbers as a precursor as to what happens with the Yen. If they look good, the BoJ can raise sooner. 2. US inflation: if this ticks up and the Fed does not raise rates, then the dollar sinks against the Yen.
I guess lenders are tightening up on Alt-A loans now
"csmgcorp: Well I just got my first email from a lender I use quite often. They are upping all requirements for their ALT-A products.
This really hurts..."
"Promise Land: These changes are only the beginning. There may be more noticeable changes in the horizon for this month. Almost all lenders will do away with the 100% Stated and FICO requirements will be higher for Stated. Lets not forget that Reserve requirements will increase, as well. 100% loans in all documentation flavors will pretty much be obsolete for FTHB."
"csmgcorp:No Ratio and No Doc were affected BIG TIME in this update. I just got another similar email..... doesn't look good. This is 90% of my business (alt-a lending)"
Ouch....big time ouch
"Promise Land: The market is just correcting itself. If you go back to the early 90's... there was no such thing as 100% loans and LOs were still making a decent living. All of these exotic loans were introduced in the early 2000's. People will always need a loan whether the rates are 1% or it's 21%. Either they buy or they die. There will always be a huge market for people with imperfect credit who need the house or the cash.
Sure, it's a time for the 'survival of the fittest' if you will and each and everyone of us will need to earn our business. There will be no easy or free meals! That means continuing to educate ourselves, being an advisor to clients, 'actually' marketing and honing the fundamental skills of this profession."
I love this one:
"DANKA: Yes, but look at the prices of what houses were in the 90'ss......
MUCH MUCH less...sorry but with all these program cuts, I dont care what anyone says, a ton of brokers are going to go by the wayside, and banks will NOT be lending money....
It was a lot easier to have 5 percent down 15 years ago on a 150,000 single family home. This same house today is 350,000.00 and believe me, salaries have not risen as fast as home prices did.
Thats why anyone who thinks its going to be a GREAT market has to really think how that could POSSIBLY be...."
1) Let's suppose a CA-based FDIC insured bank (BANK) does all their originations (and I assume purchases) using neg am ARMS, based on Prime FICO and 'stated' income, verified assets (I assume this could be the propert appraisal as opposed to some other asset?).
2) And suppose the FDIC C&D for Freemont is the new law of the land.
Q1: Can you provide some insight on what this might mean for BANK'S originating/purchasing activities going forward.
Q2: For loans prospectively resetting, does 'verified' income now come into play in any way. Is there something that would require BANK to now check the W-2?
It would seem this 'verified' income thing would mean a lot of folks won't be qualifying for loans given the run up in home prices vis-a-vis the growth in (verified) personal income.
Hapsbuger, "verified assets" in this context means liquid assets of the borrower (bank/brokerage accounts). The property is not an asset of the borrower in this context.
The FDIC is going to look at whether the loans originated since the publication of the Nontraditional Mortgage Guidance (and current Subprime Guidance) are being qualified properly. If they are not, the lender is going to get, at minimum, a negative finding in its next safety and soundness examination.
That does not necessarily mean that that lender will get a C&D. What FMT was up to was well beyond just making stated income loans. And nothing in the FMT C&D is "new" law; it's just the first time we've seen the Nontraditional Guidance referenced in a public order against a hideously incompetent thrift.
When a loan "resets" according to contractual terms, there is no requalification of the borrower. The loan terms simply change as they were specified to change in the original loan contract (the note).
If a lender modifies a loan or makes any other change to the original loan's contractual term, then yes, the lender is expected to reverify the borrower's capacity to repay. That will mean that someone who got the loan as "stated" isn't likely to get a modification except with full verification of income and assets. Any lender who is modifying the terms of a stated income loan without forcing the borrower to verify this time is asking to be kicked into the next county by the regulators.
Finally an honest man in the business who tells it like it is. Is there an award we can nominate or create for Donald Tomnitz?
I suggest an original CR and Tanta autographed head-banging pillow.
And further down in that Bloomberg article
We're now running at half the pace of inventory that we had three or four months ago,'' Toll said.So I would guess, and that's all it is, it'll be another four or five months before you finally burn off inventory in most of the markets.
After predicting that the home market was nearing a bottom'' in December, Toll last month reversed course as deposits failed to live up to expectations. Today, he tempered his comments by saying the marketis still beset by speculation'' and that it may take longer in some areas to pare the number of unsold properties.
We believe that as soon as the market turns, and I'll speak about it, we think it'll turn with a vengeance,'' Toll said.The incentives are coming down.''
And what is the reason why we should listen to Bob Toll again? Why should Bloomedberg canvass his opinion again?
I need one of those pillows...maybe more.
We should all listen very carefully to Rober(t) Toll. Particularly the sound of the cash register ringing (ala Cramer) as he continues to sell his TOL shares.
-Robert
"2007 is going to suck"
That is one for the blog roll of honor.
Very true... scaringly true. The rose colored glasses lie shattered on the floor.
So the next step is mass layoffs.
But its time for the purge.
Got popcorn?
Neil
Tanta,
How significant is this w/r/t processing foreclosures?
MERS Notches Win in Florida; Hailed as Protection of Creditor’s Rights : HousingWire || financial news for the mortgage market
Neil,
for your sister: make sure she does not put the money all in one bank such as country wide.
in part: have her buy some yens (ETF called FXY) and maybe Euros to protect against currency chnages. (ETF called UDN)
When I was in grad school I took some accounting & some marketing & 'operations'... but must've been asleep or on a business trip when they went over this 'suck' thing. Too bad.
Donald had better watch it, theyll write "sometimes expresses himself with very little tact" on his report card like one of my old bosses did to me.
No sense in trying to sugarcoat the obvious. Bravo! Good show mate!
The "SUCK" heard around the world.
Donald had better watch it, theyll write "sometimes expresses himself with very little tact" on his report card like one of my old bosses did to me.
Ya the 'other' Donald just tells you 'You're fired'... this guy will tell you 'You suck' first. Now that has all the makings of a highly rated cable reality show. Screw making houses, make TV instead.
dryfly
LMAO We may not know much about economics but we have fun. I still have money in my wallet so things are going pretty good around here.
OK. This is what I was looking for.
I started watching the grapevine two weeks ago and noticed biz as usuaul.
100% LTV, NINA (No Income No asset) and still 7 offers for a loan. just take it.
But it changed. It changed fast. VERY VERY fast:
Mortgage Grapevine: Whats up with hardly anyone responding to posts?
Is this the credit crunch train ?
This is not just sub-prime/100% LTV any more.
USD/JPY @ 115.83 now.
Brian, I would think that ruling--and others like it, if MERS can prevail in other states--should speed up foreclosures (in mortgage states, at least. I'm not sure how much of an impact it has on DOT states). By how much, I don't know. It certainly make them cheaper, since it means that the servicer can handle the foreclosure in its own name, as assignee of the mortgage, without having to have everything be represented in law by the investor, who is the actual endorsee on the note. In other words, it should eliminate some really tedious paperwork and prevent foreclosures being stalled when some clever attorney argues that some motion got made by the servicer and should have been made by the investor. At least that's my understanding of it. I am, of course, not now nor have I ever been an attorney, jailhouse or otherwise, and therefore any reliance on any comment made on this blog as to matters of law or equity by any party of the second part is highly discouraged on the grounds that it's bird-witted.
At least in Florida (most of Florida anyway), Horton was late for the party. By 2003 most land owners "wouldn`t go" for option-contracts. So now Horton got stucked with a lot of land, for which they paid an arm and a leg. As I mentioned a few weeks ago, it looks like they are losing money on these new homes. So far this approach has been the lesser of two evils. But they better hurry, becouse a REO hurricane is coming. BTW, the same goes For K.B. Homes.
Fremont and New Century news;
MarketWatch.com
Expired
Business & Financial News, Breaking US & International News | Reuters.com
Was just in FL this week for Business, and DR Horton and KB Homes seem to have major developments still in the works down there. Just rows and rows of stucco boxes. They may be hurting. Met a fellow from a private equity type of company (not going to mention the name here) who is keeping their powder dry to buy the foreclosures and failed developments for pennies on the dollar. They're sitting on their hands for now. Just two data points, but two data points nonetheless.
Yal - yes, it is the credit crunch train, and yes, the credit crunch train now affects those hopeful option ARM refinancers with 700 plus FICOs in CA and FL, i.e. every third real estate agent and mortgage broker.
As I posted before, the big increase in refi apps is due to everyone trying to get in under the wire. This time its prime!!!!
And yes, DR Horton exec is right, it sucks. Welcome to walkaway city. Watch your step, pitfalls abound.
"I am, of course, not now nor have I ever been an attorney, jailhouse or otherwise,"
I was once a jailhouse attorney ... for about 6 weeks. My first client was serving a life sentence for murdering his wife for insurance money. My second client was a child molester who wanted me to stop a parental rights termination action. I just couldn't do it. So depressing. And all your clients are sleazeballs. Weird! By comparison, beating up the IRS seems so much more ... liberating.
LMAO We may not know much about economics but we have fun.
I know barely enough to ask stupid questions... but I do have fun.
Tanta, Can you comment on the following FDIC cease & desist order levied against FMT? What I would relly like to know is whether this same order would apply now across the board for all FDIC insured S&Ls.
In particular the following issues:
(i) qualifying borrowers for loans with low initial payments based on an
introductory or start rate that will expire after an initial period, without an adequate analysis of
the borrowers ability to repay the debt at the fully-indexed rate;
(ii) approving borrowers without considering appropriate documentation
and/or verification of their income;
(iii) containing product features likely to require frequent refinancing to
maintain an affordable monthly payment and/or to avoid foreclosure;
(iv) including substantial prepayment penalties and/or prepayment penalties
that extend beyond the initial interest rate adjustment period;
http://www.fdic.gov/bank/individual/enforcement/2007-03-00.pdf
This seemed to disappear into the ether the last time I posted, so if it is a duplicate I apologize.
CR (and Tanta, dryfly, MOM, and anyone else of the fine commentators we have here that I've managed to miss), there seems to be a growing suspicion in the market that the Yen carry trade is coming to an end and that the foreign financing of US debt and consumption is about to be severely curtailed. (For example, from the Economist: Economist.com So what I was wondering is do you see this potential unwinding of the carry trade and possible drop in financing of the US twin deficits by foreigners as worsening two of CR's three factors (the sector-specific credit crunch that is happening and personal consumption (through limiting personal credit, MEW, and increasing the costs of goods)). And, if so, how much (e.g., a small amount or a possibly nasty multiplier effect)? I could see this having a nasty immediate effect on the burgeoning credit crunch in the housing market and/or the winnowing of the weaker lenders and financial companies.
Andrew - the way things are strung out now, if the carry trade completely dies the economy dies. Plain & simple. We are addicted to the liquidity.
I saw ron's post (above) about the yen at 115.83 (actually ended up at 115.90 according to Y-Fin).
I'd checked in earlier in the day & looked to see where it was at (have meetings with Japanese transplants in a few weeks and been watching the yen pretty close - self defense).
But if you look at the USD-JPY for the last year... its jumped around but is surprisingly close to where it was a year ago...
Y-Finance Charts... hit the one year tab.
Now you can say that's a coincidence or you can say it is 'managed'... I don't know for sure. But if the carry trade was okay a year ago... and the rates here are the same or higher and the rates there are real close to the same (or a little higher)... and the exchange rates are pretty close to the same... Then why would the carry trade go away?
Maybe we see an adjustment - a little less aggressive, account for more volatility & arbitrage risk - but I think it is too early to suggest the carry is completely dead. JMHO.
But its been a week or more since I checked in w/ Setser or 'Cassandra in Tokyo'. Might be time to do both.
You all seem positive about 2007
sucking. Not every month, since January
and February were pretty good. Let's
see, what did I always hear about the
herd being wrong? I'm not saying 2007
WON'T suck, it's just that when I see
a stampede to one viewpoint, I get
sceptical.
re: Yen carry trade.
Several commentators have noted that there was a partial unwinding of the most aggressive trades. However, with the Yen stabilizing around 115 and the BoJ promising not to raise rates for a while, they think that it will continue at a somewhat reduced level.
Two things to keep your eye on. 1. The Japanese GDP numbers as a precursor as to what happens with the Yen. If they look good, the BoJ can raise sooner. 2. US inflation: if this ticks up and the Fed does not raise rates, then the dollar sinks against the Yen.
stampede to one viewpoint
When it turns into a stampede, you won't have to come to this blog to find the bears.
I'm not saying 2007
WON'T suck, it's just that when I see
a stampede to one viewpoint, I get
sceptical.
I don't think he meant 2007 will suck, all 12 months of it anyway. Just the housing market... especially the 'new build'.
Personally I think 2007 will be great - looking forward to the trout opener in about a month... Hope to catch lotsa fish. What could be better.
Of course I don't build or sell new homes so my view might be different than his.
I guess its all perspective.
New Century failed to fund closed loans today. See my blog for details.
you crack me up dryfly!!!
I guess lenders are tightening up on Alt-A loans now
"csmgcorp: Well I just got my first email from a lender I use quite often. They are upping all requirements for their ALT-A products.
This really hurts..."
"Promise Land: These changes are only the beginning. There may be more noticeable changes in the horizon for this month. Almost all lenders will do away with the 100% Stated and FICO requirements will be higher for Stated. Lets not forget that Reserve requirements will increase, as well. 100% loans in all documentation flavors will pretty much be obsolete for FTHB."
"csmgcorp:No Ratio and No Doc were affected BIG TIME in this update. I just got another similar email..... doesn't look good. This is 90% of my business (alt-a lending)"
Ouch....big time ouch
"Promise Land: The market is just correcting itself. If you go back to the early 90's... there was no such thing as 100% loans and LOs were still making a decent living. All of these exotic loans were introduced in the early 2000's. People will always need a loan whether the rates are 1% or it's 21%. Either they buy or they die. There will always be a huge market for people with imperfect credit who need the house or the cash.
Sure, it's a time for the 'survival of the fittest' if you will and each and everyone of us will need to earn our business. There will be no easy or free meals! That means continuing to educate ourselves, being an advisor to clients, 'actually' marketing and honing the fundamental skills of this profession."
I love this one:
"DANKA: Yes, but look at the prices of what houses were in the 90'ss......
MUCH MUCH less...sorry but with all these program cuts, I dont care what anyone says, a ton of brokers are going to go by the wayside, and banks will NOT be lending money....
It was a lot easier to have 5 percent down 15 years ago on a 150,000 single family home. This same house today is 350,000.00 and believe me, salaries have not risen as fast as home prices did.
Thats why anyone who thinks its going to be a GREAT market has to really think how that could POSSIBLY be...."
Alt-A Guidelines.... you knew it was coming
Vegas - the 'Promise Land' guy you linked to on BO was about as FOS as anyone I have ever heard... and I've been working since the early 70s.
If only Rah-Rah paid the bills...
Ok, Vegas is not a lawyer...and possibly a recreational fisherman.
Tanta,
1) Let's suppose a CA-based FDIC insured bank (BANK) does all their originations (and I assume purchases) using neg am ARMS, based on Prime FICO and 'stated' income, verified assets (I assume this could be the propert appraisal as opposed to some other asset?).
2) And suppose the FDIC C&D for Freemont is the new law of the land.
Q1: Can you provide some insight on what this might mean for BANK'S originating/purchasing activities going forward.
Q2: For loans prospectively resetting, does 'verified' income now come into play in any way. Is there something that would require BANK to now check the W-2?
It would seem this 'verified' income thing would mean a lot of folks won't be qualifying for loans given the run up in home prices vis-a-vis the growth in (verified) personal income.
Hapsbuger, "verified assets" in this context means liquid assets of the borrower (bank/brokerage accounts). The property is not an asset of the borrower in this context.
The FDIC is going to look at whether the loans originated since the publication of the Nontraditional Mortgage Guidance (and current Subprime Guidance) are being qualified properly. If they are not, the lender is going to get, at minimum, a negative finding in its next safety and soundness examination.
That does not necessarily mean that that lender will get a C&D. What FMT was up to was well beyond just making stated income loans. And nothing in the FMT C&D is "new" law; it's just the first time we've seen the Nontraditional Guidance referenced in a public order against a hideously incompetent thrift.
When a loan "resets" according to contractual terms, there is no requalification of the borrower. The loan terms simply change as they were specified to change in the original loan contract (the note).
If a lender modifies a loan or makes any other change to the original loan's contractual term, then yes, the lender is expected to reverify the borrower's capacity to repay. That will mean that someone who got the loan as "stated" isn't likely to get a modification except with full verification of income and assets. Any lender who is modifying the terms of a stated income loan without forcing the borrower to verify this time is asking to be kicked into the next county by the regulators.